MONTGOMERY, Ala. — Through a recent partnership with the U.S. Department of Agriculture, the Alabama Department of Agriculture is hoping to see a resurgence of commodity processors in the state that its commissioner feels will leave an impact for decades.
Alabama’s agricultural industry is among the nation’s leading producers of several commodities, including cattle, poultry, cotton and peanuts. The problem, Agriculture Commissioner Rick Pate said Tuesday, is a lack of processors to prepare those commodities for market.
Pate spoke to the state’s lack of processors after a meeting of the Alabama Agricultural Development Authority, during which the board reviewed applicants for the Alabama Meat Processing Program, which offers low interest loans to support meat and poultry processors.
The program was established last year after Alabama was awarded $15 million from the USDA. Alabama was among 45 applicants and one of 15 states ultimately chosen.
The board has already closed applications for two phases of its Meat Processing Program, but still has to decide among applicants spanning 15 counties.
Pate later said he believes the $15 million in federal funding for meat processing, along with $5.7 million in federal grants for food processing, storage and distribution, could lead to a resurgence in the amount of food processors operating within the state.
“The two (programs) that we’re neck-deep in right now is (the Meat Processing Program) and another one called Food Resiliency, and both of them are sort of targeted at that middle part of the supply chain,” Pate told Alabama Daily News.
“So with fruits and vegetables, we’ve got people that want to grow that stuff and we’ve got people that want to eat that stuff; what I don’t have in Alabama is that middle guy that wants to aggregate it, or chop it up.”
Another commodity Pate pointed to was cotton, which is the state’s most abundant row crop, grown in 59 of Alabama’s 67 counties. He said that while production of cotton was abundant in the state, Alabama was missing out on enormous economic opportunities because of its lack of industry to actually turn cotton into a sellable product.
“Cotton is a perfect example; whatever cotton is grown in the United States, we keep about 15% to 20% of it here, then we send the rest of it overseas and then we buy that same amount back as further processed as t-shirts and underwear,” Pate told ADN.
“So that’s the reason now in the last three years, for the first time in the history of the United States we’ve got a trade imbalance in agriculture because we’re sending wheat, soybean, cotton and corn as raw products, and then what we buy back are finished products.”
“We’re sending wholesale to buy in retail,” he added.
Alabama was not spared from the significant loss of manufacturing jobs the United States experienced beginning in the 1980s, and accelerated in the 1990s with the 1994 adoption of the North American Free Trade Agreement, as well as the 2001 addition of China to the World Trade Organization.
Since the adoption of NAFTA, an estimated 93,000, or 26% of Alabama’s manufacturing jobs were lost as of 2018, according to data from the Bureau of Labor Statistics. Between 2001 and 2013, an estimated 42,000 jobs were lost or displaced in Alabama due to the rise in the United States’ trade deficit with China.
The new federal funding propping up Alabama’s efforts to revitalize commodity processors in the state was in part an effort to reverse that trend, and made possible through the 2021 American Rescue Plan Act.
“This is going to continue to have a ripple effect for decades,” Pate said.
“Hopefully, this will make money and we’ll have more to loan out. Beef processors, banks don’t want them, they don’t understand that industry and they don’t want meat processing equipment as collateral.”